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Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank -- Ignore unavailable to you. Want to Upgrade?

To: Jenna who wrote (112040)	8/18/2000 12:30:30 AM
From: Jenna	Respond to of 120523

An absolutely lovely chart.. MENS, CFLO. These were among our earnings play this week and now the chart of MENS has moved into a particularly nice uptrend without being overbought. Nice one. CFLO also a great chart, but this one is looking overbought at this level.. Both stocks will most likely return for more upside. With a beta of .88, MENS is for the conservative trader while CFLO might not be for the faint of heart.

To: Jenna who wrote (112040)	8/18/2000 1:44:04 AM
From: Jenna	Read Replies (5) \| Respond to of 120523

Discard "antiquated" Gap Strategies Gap trades should only be contemplated during key morning reversal periods.. One the biggest mistakes made by traders is in not utilizing the phenomenal opportunity for trading gaps during 2 morning reversal periods. Traders miss the entire 'beefy' part of the trading day by getting on board at the end of the second reversal period (10:35) or jump in after 1 or 2 minute charts instead of watching charts with multiple time frames. In the process they are getting whipsawed to death with 2 or 1 minute charts. 9:50 - 10:10 am Key reversal period This is the time that most gap-ups or gap-downs stall, or head lower if its a gap up or higher if its a gap down. By entering on a 2 minute chart you will most likely be chopped to pieces by by the accumulation of order flow in the first few minutes of trading. These orders pile up and generally if it was an institutional buyer/s or any dealer, the gap will close as the orders are filled. This can happen in as little as five minutes. Then the stock could move down very swiftly. However, if the move up in the morning is a result of fundamental news, volume will start to rise and you will see a number of blocks being printed with even higher prices. If you have done your homework and note the earnings report, have a 3-pronged attack plan with the following: ► Watch a daily, 5-minute, and 15 minute chart. On the 15-minute chart you must have a 200 period moving average and a 20 period moving average, a volume indicator, oscillator and optional is a trending indicator like ADX. ► Watch the S&P Futures, Nasdaq Futures, Trin and Tick. If your stock is in a 'key' sector than watch the entire index on a 5 minute chart with an 8 period and 20 period moving average. ► If the market internals are negative, chances are that the fundamental good news won't hold up the stock that long. If the stock is up only on 'market sentiment' that is even worse because market sentiment is very fickle. If the market internals are positive and the stock is moving on a good earnings report than: ► If you have seen rising volume, and price bars of consecutive higher highs and higher lows (bullish candlesticks) after about 3 5-minute bars you might enter the gapping stock in the direction of the gap (short if its a gap down) for the probable breakaway gap by 9:50. Put in a stop below the low of that last bar. ► If the stock is reversing it will only take till 9:50 to begin that reversal if there is to be one. You might wait until 10:00 (the stock will no doubt be heading higher if it makes a 30 minute high showing that the gap up was real and will continue to move higher). If you wait any long than 30 minutes, you will have passed the all important (first 30-minutes of trading).. and have missed the boat on a breakaway gap. The second reversal period 10:25 - 10:35 A stock that is in a breakaway gap will usually stall after about 3 or 4 15-minute bars. But why miss the runaway gap after a very good earnings report? It is here where traders are getting a little antsy. They see the stock rising above its morning gap up and don't want to miss the boat, so they enter at a possible high period. What does the Market Gems trader do? We are probably getting ready to exit the trade at this point on the first sign of a reversal 15 minute or 2 5-minute bars. There are a number of key reversal bars patterns you could use. A narrow range bar, a violation of the previous bars low, a particularly large doji, spinning top. Even a particularly spiking range expansion bar with long tail on large volume can indicate a change of trend. Of course if the market internals are positive the stock can just keep moving up and we might not get the anticipated reversal until 11:15, the third morning period. 10:25 is not time to enter in the direction of the trend even if the stock is in a runaway gap. On the other hand, this could very well be the time the stock reverses to give back the gain above the morning gap or even begin to fill the gap. By 10:25, we are not looking to trade in the direction of the morning gap, but rather in the direction of a possible reversal. This reversal might last until 11:15 to 11:30 until the stock moves into consolidation for a period that can last hours. If the stock is moving up without fundamental news but just on a really positive rally day, the uptrend following the gap up can be very short lived. You can NOT move into a gap up after the first 30 minutes of trading if the market internals are deteriorating. The first 20-30 minutes are an excellent time to judge if you are to do nothing, or enter in the direction of the gap. Waiting an hour is too late. By 10:30, I've already made the 'beefy trades' and taken profits and getting prepared for the next reversal period of 10:25 -10:35 to make even more money on shorting the possible reversal or go flat, especially if the market internals are getting worse anyhow and you can profit on the short side now. Whatever you do, discard older gap theories. They don't take market internals into consideration, they don't rely on 3 different chart intervals for confirmation, nor do they take into consideration the enormous profit you can make by entering a high flying stock that moves up 10% or more above the morning gap. 11:15 - 2:15 Afternoon doldrums usually the market is quiet and the strong or weak stock goes into consolidation ► 3:00 by this time if the market internals are strong, chances are good, that your stock will now move up again off the lunchtime consolidation or even downtrend. In fact the uptrend (or down trend) can even accelerate. Then you have another chance to trade on a repeat of the morning move up. ► 3:30.. This is by far the most exciting period. This time period can even reverse (and usually does) the move made in the 3:00 period. Here is where markets that are selling off even into the triple digit losses can bottom and recover swiftly. Here is when you decide whether to keep the trade or just get back into cash for the next day.